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RATIO ANALYSIS &

INTERPRETATION
APOLLO LTD &
CEAT TYRES
PROFITABILITY RATIO

1. PROFIT MARGIN RATIO : x100

YEAR APOLLO LTD CEAT LTD


2015 10.4% 5.34%
2016 9.33% 7.78%
2017 7.08% 5.13%

The profit margin for the year 2015 for Apollo tyres was 10.4% which decreased to 9.33%,
2016,because of decrease in revenue and profit margin ratio again reduced to 7.08% in 2017
,this shows decrease in profit because of increase in expenses such as exceptional items,
material cost, and interest in 2017.
The profit margin for the year 2015 for Ceat Ltd was 5.34% which has been increased to 7.78% in
2016 Because of increase in revenue and profit margin ratio again reduced to 5.13% this
decrease in profit was because of increase in expenses such as exceptional items, material cost,
interest in 2017.
PROFITABILITY RATIO

2. ASSET TURNOVER RATIO:

YEAR APOLLO LTD CEAT LTD

2015 1.44 TIMES 1.60 TIMES


2016 1.18 TIMES 1.43 TIMES
2017 1.04 TIMES 1.41 TIMES

Apollo Tyres has an Asset Turnover Ratio of 1.44 times in 2015 which has been decreased to 1.18
times in 2016 and further it slightly decreased to 1.04 times in 2017 this shows decrease in profit
margin occur due to excess capacity frequent breakdown ,lack of raw material or power etc.

Ceat Ltd has Asset Turnover Ratio was 1.60 times in 2015 which has been decreased to 1.43 times
in 2016 and further slightly decrease to 1.41 times in 2017 this decrease may be because of
excess capacity frequent breakdown ,lack of raw material or power etc.
PROFITABILITY RATIO

3. RETURN ON ASSET : x100

YEAR APOLLO LTD CEAT LTD


2015 15.07% 8.53%
2016 11.07% 11.17%
2017 8.15% 7.27%

ROA (return on assets) for Apollo Tyres for the year 2015 was 15.07% which decreased to 11.07%
in 2016 due to excess installed capacity due to interruption in production. In 2017 the ROA has
been further decreased to 8.15 % which is again due to excess installed capacity or due to
interruption in production.

ROA for Ceat Ltd for the year 2015 was 8.53% which increased to 11.17% in 2016 this shows the
company has been able to utilize its assets in an optimum manner and for year 2017 the ROA has
been decreased to 7.27% which is due to excess installed capacity or due to interruption in
production.
PROFITABILITY RATIO

4. RETURN ON EQUITY : x100

YEAR APOLLO LTD CEAT LTD


2015 27.70% 23.33%
2016 19.47% 23.70%
2017 15.82% 14.80%

ROE (return on equity) for Apollo Ltd. In 2015 was 27.70% which shows that the company has
sufficient funds to give interest to the shareholders which was marginally decreased to 19.47% in
2016 and which shows the company has not been able to utilize its shareholders funds in an
optimum manner and it further decreased to 15.82% in 2017 the decrease of ROE this shows the
shareholders are losing their wealth for consecutive 2 years.
ROE for Ceat Ltd. In 2015 was 23.33% which shows that the company have sufficient funds to give
interest to the shareholders which was slightly increased to 23.7% in 2016 and which further
decreased to 14.80% in 2017 the decrease of ROE shows the company has not been able to
utilize its shareholders funds in an optimum manner.
LIQUIDITY RATIO

5. EARNING PER SHARE :
.

YEAR APOLLO LTD CEAT LTD


2015 19.20 73.91
2016 21.47 109.92
2017 21.59 81.70

The EPS earning price per share for Apollo tyres was Rs.19.2 in 2015 which shows that company
has been successful in generating the sufficient profit margin and for 2016 it increased to Rs21.47
and which it further increased to Rs21.59 in 2017 which shows the share per price was rising for
the shareholders.
The EPS of Ceat Ltd. was Rs.73.91 in 2015 which shows that company has been successful in
generating the sufficient profit margin which lead to high EPS and for 2016 it increased to Rs109.91
and which further decreased to Rs.81.7 this due to marginal drop in the revenue.
LIQUIDITY RATIO

1. CURRENT RATIO :

YEAR APOLLO LTD CEAT LTD


2015 1.43:1 1.60:1
2016 1.30:1 1.26:1
2017 1.11:1 1.30:1

In the year 2015 Apollo Ltd had a current ratio of 1.43:1 this further decreased to 1.30:1 in 2016
due insuffient management of current assets to meet out its ongoing current liability then it. In
2017 it got decreased to 1.11 which shows that the company had increases its current liability.

The Current Ratio of Ceat Ltd. for the year 2015 was 1.6:1 which reflects the company ability to
generate cash out of its current liability and it has in reduced to 1.26:1 in 2016 and further
increased to 1.30:1 this is due to withdrwal of current assets.
LIQUIDITY RATIO

2. QUICK RATIO :

YEAR APOLLO LTD CEAT LTD


2015 0.74:1 0.75:1
2016 0.73:1 0.73:1
2017 0.51:1 0.63:1

Quick ratio of Apollo tyres for the year 2015 was 0.74:1 which slightly increased to 0.73:1 , 2016
and it further got reduced to 0.52:1 in 2017 this means that company does not have sufficient
liquid asset to pay off current obligations.

The quick ratio of Ceat ltd for the year 2015 was 0.75:1 which shows that the company does have
sufficient liquid assets to pay off its current obligation which decreased to 0.73 in 2016 and 0.63
this shows the risk of non payment of current liability.
LIQUIDITY RATIO

3. DEBTOR TURNOVER RATIO :

YEAR APOLLO LTD CEAT LTD


2015 12.79 TIMES 8.07 TIMES
2016 11.45 TIMES 8.63 TIMES
2017 12.18 TIMES 10.67 TIMES

Debtor turnover ratio of Apollo Ltd was 12.79 times in which means debtors were converted into
cash.In 2016 it got decreased to 11.45 times which is due to increase in debtors as credit sale
increased but it further got increased to 12.18 which show greater efficiency in converting debt
into sales.
Debtor Turnover Ratio of Ceat Ltd. for the year 2015 was 8.07 times which means that the
company converts its debtor into cash.Debtor turnover for the year 2016 increased to 8.63 times
and furthur it increased to 10.67 times.
LIQUIDITY RATIO
360
4. AVERAGE DEBT COLLECTION PERIOD :

YEAR APOLLO LTD CEAT LTD


2015 28 DAYS 45 DAYS
2016 31 DAYS 42 DAYS
2017 30 DAYS 34 DAYS

The average debt collection period for Apollo Ltd was 28 days for the year 2015 and it increased
to 31 days in the year 2016 which shows that company holds liberal collection policy for its
debtors and it further decreased to 30 days which show a quite fast conversion of debt into cash.

The average debt collection period for the Ceat Ltd was 45 days for the year 2015 which shows
company has liberal policy towards its debtors and it decreased to 42 days which reflects that
company holds a conservative policy towards its debtors. It further reduced to 34 days which
shows there is a decrease in credit sales by the company.
LIQUIDITY RATIO

5. INVENTORY TURNOVER RATIO :

YEAR APOLLO LTD CEAT LTD


2015 5.94 TIMES 5.05 TIMES
2016 5.55 TIMES 7.58 TIMES
2017 5.60 TIMES 7.59 TIMES

Inventory turnover ratio for Apollo Ltd for the year 2015 was 5.94 times has a good conversion of
inventory into sales which means company has been successful in utilizing its resources and in
year 2016 it was reduces to 5.55 which reflects there is a marginal drop in the sales and it further
increased to 5.60 times which is possible because of proper handling of inventory.

Inventory turnover ratio for Ceat for the year 2015 was 5.05 times which shows company converts
its inventory into sales at a good pace but it increased to 7.58 times which shows there is a drop
in sales which is not a good indicator for the growth of the company and it further increased to
7.59 times.
LIQUIDITY RATIO
360
6. INVENTORY HOLDING PERIOD :

YEAR APOLLO LTD CEAT LTD


2015 61 DAYS 71 DAYS
2016 65 DAYS 47 DAYS
2017 64 DAYS 47 DAYS

Inventory holding period for Apollo Ltd for the year 2015 was 61 days which shows the
companys ability to hold its inventory for long enough to meet the future requirement of
inventory and it increased to 65 days which shows the companys efficiency to manage the
inventory and it further reduced to 64 days.

Inventory holding period for the year 2015 was 71 days which shows the company has a good
inventory management but in the year 2016 the company could not be able to manage its
inventory for more than 47days which reflects companys inefficiency towards its inventory and it
remained the same for the year 2017.
SOLVENCY RATIO

1. DEBT EQUITY RATIO :

YEAR APOLLO LTD CEAT LTD


2015 0.15:1 0.31:1
2016 0.21:1 0.30:1
2017 0.44:1 0.37:1

Debt equity ratio of Apollo for the year 2015 was 0.15:1, which got increased to 0.21:1 which
shows that company uses more amount of debt in 2016 and it further increased to 0.44:1 in 2017
, this reflects that the company is using high leverage, which shows that the company is taking
more risk for creditors and increases its debt obligations.

The Debt Equity Ratio for Ceat ltd for the year 2015 was 0.31 shows that company has low use of
leverage implicts lower risk in 2016 it decreased to 0.30 which shows a very conservative
approach which further increased to 0.37 which shows inefficient use of financial leverage in 2017
as compared to other two years.
SOLVENCY RATIO

2. LIABILITY TO EQUITY RATIO :

YEAR APOLLO LTD CEAT LTD


2015 0.70:1 1.27:1
2016 0.79:1 1.004:1
2017 1.09:1 1.03:1

Liabilities to equity ratio of 2015 is 0.70:1 which show the company was not capable to make an
appropriate financial leverage for the total proportion of liabilities and it increased to 0.79:1 in
2016 and then it further 1.09:1 in 2017 which means Apollo tyres have paid of substantial amount
of equity in the companys total liability which decrease the debt burden for the company.

Liabilty to Equity ratio of ceat ltd for the year 2015 was 1.27:1 which shows that the use optimum
amount of liquidity out of total liability which decreased to 1.004:1 in 2016 which implicts that the
company has paid its long term borrowings in 2016 and its further there was a slight decrease in
the equity shareholders worth which changed the liability to equity ratio to 1.039:1 in 2017
SOLVENCY RATIO

3. INTEREST COVERAGE RATIO :

YEAR APOLLO LTD CEAT LTD


2015 6.97 TIMES 4.11 TIMES
2016 15.77 TIMES 7.84 TIMES
2017 13.94 TIMES 5.77 TIMES

Interest Coverage Ratio of Apollo Ltd for the year 2015 was 6.97 times which shows the compamy
provide enough safety to its stakeholders and has sufficient funds to pay off their interest charge
on various debt component and in 2016 it was increased to 15.77 times due to decrease in profit
for the same year and further it decreased to 13.94 times in 2017 due to increase in interest
expenses.
Interest Coverage Ratio of Ceat Ltd for the year 2015 was 4.11 times which shows the company
provide enough safety to its stakeholders and has sufficient funds to pay off their interest charge
on various debt component and in 2016 it was increased to 7.84 times due to decrease in profit
for the same year and further it decreased to 5.77 times in 2017 due to increase in interest
expenses in the same year.
CAPITAL MARKET RATIO

1. PRICE EARNING RATIO :

YEAR APOLLO LTD CEAT LTD


2015 10.27 0.87
2016 8.40 0.64
2017 10.65 1.20

Price Earning Ratio for Apollo Ltd for the year 2015 was 10.27 per share the company has good
opportunity for its shareholders and higher return than the expected return. P/E Ratio for the year
2016 was 8.45 per share which shows that the company could not be able to generate optimum
growth for its shareholders which reflect the under pricing of shares and further it increased to
10.65 per share in 2017 which means that the company has been able to retain the trust of the
shareholders.
Price Earning Ratio for Ceat Ltd for the year 2015 was 1.2:1 the company has good opportunity for
its shareholders and higher return than the expected return.P/E Ratio for the year 2016 was 0.65
which shows that the company could not be able to generate optimum growth for its
shareholders which reflect the under pricing of shares and further it increased to 0.87:1 in 2017
which means that the company has been able to retain the trust of the shareholders.
CAPITAL MARKET RATIO

2. DIVIDEND YIELD RATIO :

YEAR APOLLO LTD CEAT LTD


2015 0.10:1 0.15:1
2016 0.11:1 0.16:1
2017 0.13:1 0.11:1

Dividend Yield Ratio for Apollo Ltd for the year 2015 was 0.10:1 which shows the company could
be able to generate optimum return to its preference shareholders and it increased to 0.11:1 for
the year 2016 this due to change in price of dividend per share from Rs.10 per share to Rs.11.5 per
share and in 2017 it there was a slight drop in dividend yield ratio to 0.13:1

Dividend Yield Ratio for Ceat Ltd for the year 2015 was 0.11:1 which shows the company could be
able to generate optimum return to its preference shareholders and it increased to 0.16:1 for the
year 2016 this due to change in price of dividend per share from rs 10 per share to Rs 11.5 per
share and in 2017 it there was a slight drop in dividend yield ratio to 0.15:1
CAPITAL MARKET RATIO

3. PRICE TO BOOK RATIO :

YEAR APOLLO LTD CEAT LTD


2015 1.90:1 0.15:1
2016 1.50:1 0.13:1
2017 1.60:1 0.16:1

Price to Book Ratio for Apollo Ltd for the year 2015 was 1.9:1 which shows the company have an
optimum growth opportunity from future prospect. In year 2016 it shows a slight decrease in the
ratio to 1.5:1 which reflects that the company was slight insufficient to generate good return for
shareholders.In 2017 there was an increase in price to book value ratio to 1.6:1 but still it shows
insufficient growth for the shareholders due to under pricing of shares.
Price to Book Ratio for the year 2015 was 0.15:1 which shows the company has under priced its
share and the stakeholders does not have an optimum growth opportunity in the company future
prospect. In year 2016 it shows a decrease in the ratio to 0.13:1 which reflects that the
performance of the company was not appropriate from the shareholders point of view. In 2017
there was a slight increase in price to book value ratio to 0.16:1 but still it shows insufficient growth
for the shareholders due to under pricing of shares.